WASHINGTON, D.C. - The Department of Justice announced today that on
June 14, 2004, a federal court in Las Vegas ruled that Irwin A. Schiff, a
well-known promoter of frivolous tax evasion excuses, is liable for over $2
million in individual income tax liabilities and related interest and
penalties, in civil litigation brought by the government to recover Schiff’s
unpaid income taxes for the years 1979 through 1985.

Schiff maintained that he should be excused from the imposition of civil fraud
penalties because he allegedly has recently been diagnosed as suffering from a
“chronic and severe delusional disorder” that resulted in his irrational and
incorrect beliefs pertaining to the federal income tax system. The court
declined to accept Schiff’s diminished-capacity defense.

The June 14 Order is not related to the grand jury’s March 24, 2004,
indictment of Schiff and others on charges of criminal conspiracy and multiple
violations of the internal revenue laws.

This matter was handled by the Justice Department’s Tax Division. The Tax
Division represents the IRS in civil litigation to collect taxes in
high-profile, complex or precedent-setting cases. Eileen J. O’Connor,
Assistant Attorney General for the Tax Division, thanked trial attorneys Henry
C. Darmstadter and Guy P. Jennings for their work in this matter.

For more information on this case and on the Department of Justice’s other
tax-scam enforcement actions, go online to
http://www.usdoj.gov/tax/03_tax_167.htm.